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Friday, May 25, 2012

Initial unemployment claims were down again last week maintaining the improving trend. The big headline trumpeted on the news this morning was that capital goods orders (that’s business equipment), orders were down again in April, (SURELY PROVING THAT OBAMA IS KILLING THE ECONOMY). They don’t mention that this has been the trend since the special tax break that Obama and the Democrats gave to small business on such purchases expired at the end of the past year. The Republicans who are such so-called “friends to small business” have refused to renew the tax break. Tax cuts are only for the really, really rich, don’t you know?

Durable goods orders were up however (cars, appliances and such) suggesting that business is in fact recovering. North American auto makers are operating at near capacity and will curtail the normal summer plant shut downs in order to meet demand. You don’t hear the Republicans chanting their favorite question so much any more, “are you better off than you were four years ago?”, because too often the answer is “yes”.

Not that we’re doing all that great. We could re-instate the Alexander Hamilton plan that built America, the plan that Reagan and his successors killed. If you’re old enough, you can remember the bright shiny George Jetson future we were promised for the 21st century, you know, like the Chinese are doing. They really like our founding fathers in China, and learn from them.

Gasoline prices continue to decline at the time of year when you would expect them to go up. Families are planning to drive a lot more for Memorial weekend, although air travel is expected to be down. Airlines are still hurting from getting burned on jet fuel futures, and they are taking it out on ticket buyers. Wall Street bankers drove the expected fuel price way up, so airlines have been contracted into paying higher than the current market price for fuel.

When you’re on a plane and riding back in steerage, where you pay extra for oxygen, just remember the fat banker up in first class paid for his ticket with the money he made off of your ticket. The same goes for filling up at the gas pump, the price maybe down compared to last year, but you’re still paying a lot extra. Republicans won’t allow the Dodd-Frank Act to be enforced against bankers controlling the price of gasoline, that‘s how Ann Romney can drive several Cadillacs, and you‘ve got your eye on a used Toyota.

The predatory Wall Street banks are moving against Spain’s banks using their lap dog credit rating agencies to downgrade Spain to junk bond status. Spain was a really bright spot in the world’s economy but unregulated predatory trans-national capitalism is destroying them. If the so-called periphery countries of Europe were smart, they would flip off the bankers like Iceland did. The bankers made a grab for the whole island and lost, the Vikings were too tough for them. The consolation prize for the bankers seems to be southern Europe. Don’t worry, they will get around to us eventually. www.prairie2.com

Tuesday, May 22, 2012

Jamie Diamon, the smartest guy in the room when the masters of the universe get together, has lost $5 billion so far, and they’re not done counting. Considering that JP Morgan Chase could get into that much trouble, what is going on at the other zombie banks that we don’t know about? Mitt Romney isn’t concerned, “somebody else made money [my friend]”. This dumb ass claims he knows how the economy works. If we had an economy based on pirate ships and mob arsonists, he might know something.

Fat cats (typically those with $500,000 or more in a trading account) who loaded up on Facebook’s IPO because they had the inside deal are “un-freinding” their brokers. They were planning to double their money selling to us peasants, the stock lost 11% on Monday and another 9% today. Rumor has it that Wall Street banks who sponsored the IPO were buying stock on Friday just to keep it from going to the floor.

With the three biggest banks involved, JP Morgan, Goldman Sachs and lead conspirator Morgan Stanley, you had to figure something untoward was going on. It seems they warned off the really big investors that the stock was over priced. The smaller fat cats who thought they were in on something big turned out to be the suckers this time. Facebook does have the potential to make money at some level, doubtless the big money will be happy to buy the stock at some price.

Gold bugs aren’t doing so hot, with it currently trading 20% off its high last fall. I got a lot of heat from Glen Beck fans last year for saying gold wasn’t a good investment, I don’t hear from them so much anymore. Some people are saying it could go to $700/oz and they make a good argument for it, that would be inline with historical prices. This would be opposed to the “hysterical” price of $7000/oz the right was predicting a year ago. Retail bullion and coin sellers report sales are off between a third and half what they had been a few weeks ago.

Austerity proponents are fading fast with Obama lecturing the G-8 summit at Camp David over the weekend, on the benefits of job creation and growth. Some people are catching on that you can’t simply force the middle class to pay off loans without allowing them to have any income. The Europeans still have democracy, and aren’t shy about showing incompetent leaders the door.

Greece however is experiencing a slow motion “bank run” with depositors withdrawing their money and the European Central bank covering the Greek banks with loans. Loans they will default on to a large degree when Greece converts to its own currency. The bankers are making overt threats about isolating and starving Greece if they do this.

The bankers don’t seem take into account that there is a potential White Knight in the BRICS countries (Brazil, Russia, India, China and South Africa). Turkey is already flirting with them. Spain, Italy and Portugal could follow suit making for a rather awkward situation. China is the dominant member in this movement and they have that saying about “… [living] in interesting times”, indeed we do. www.prairie2.com

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